Samsung’s US subsidies higher than HTC, Apple

Staff writer, with CNA

Mon, Jul 01, 2013 - Page 13

US carriers offer higher subsidies on smartphones from South Korea’s Samsung Electronics Co than on similar products from Taiwan’s HTC Corp (宏達電) and US firm Apple Inc, a report said.

The average subsidy offered by US carriers on a Samsung smartphone is 84 percent, compared with 80 percent for HTC devices and 74 percent for Apple’s iPhones, according to a report released on Thursday by market intelligence firm ABI Research.

That means that US operators, on average, cover 84 percent of the cost of a Samsung smartphone, while the remaining costs are recouped in service fees under contracts with subscribers.

As a result, the average price of a Samsung smartphone, after subsidy, is lower than that of HTC phones and Apple’s iPhone lineup, ABI Research’s data showed.

“Samsung continues to squeeze its competitors at every turn. The Samsung Galaxy S4 is now considered on par with Apple’s iPhone 5,” ABI Research chief research officer Stuart Carlaw said.

“Combined with a higher subsidy, the breadth of its device portfolio, increasingly savvy marketing and its excellence in channel execution, it is little wonder Samsung is dominating the mobile handset market from top to bottom,” he said.

Nick Spencer, ABI Research’s senior practice director for devices, added that the smartphone market, in particular, is entering a new phase focusing on execution and price, rather than innovation and value.

Further, Samsung’s scale and supply chain excellence is allowing it to put its competitors under increasing pressure and increase its market share, which is a major concern for other firms — especially for smaller, less efficient vendors — as margins will be squeezed and overall market value reduced, Spencer said.

The analysts’ remarks seemed to partially explain data from research firm comScore, which said that HTC continues to lose ground in the US to competitors including Apple and Samsung.

HTC saw its US market share decline to 8.7 percent in the three months ending in May, from 9.3 percent in the period ending in February, comScore said.

By comparison, Apple ranked as the top player with a 39.2 percent share of US smartphone sales, up 0.3 percentage points from February, while Samsung ranked second and increased its market share by 1.7 percentage points to 23 percent.